China To Lease 3 Million Hectares Of Ukrainian Farmland

The farmland would mainly be used for growing crops and raising pigs, reportedly.

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China To Lease 3 Million Hectares Of Ukrainian Farmland

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China has reportedly agreed with Ukraine to lease 3 million hectares of Ukrainian farmland for the next 50 years, making Ukraine China's largest overseas farming center.

Chinese media reports said on September 22 that China's Xinjiang Production and Construction Corps (XPCC) had signed an agreement with Ukrainian government-controlled agricultural firm KSG Agro to lease initially 100,000 hectares in Ukraine's eastern Dnipropetrovsk region.

That would eventually rise to 3 million hectares, in a deal said to be worth $2.6 billion per year. The media reports said the farmland would mainly be used for growing crops and raising pigs.

XPCC is a quasi-military organization established in the 1950s in China's northwestern Xinjiang-Uyghur Autonomous Province, which borders Russia and three other former Soviet republics -- Kazakhstan, Kyrgyzstan, and Tajikistan -- to reclaim farmland and consolidate defenses against the Soviet Union.

In a report last month Ukraine's "Kyiv Post" newspaper called the deal an "unprecedented foreign investment" in Ukraine's agriculture sector.

This would make it China's biggest reported lease or purchase of farmland overseas.

In a separate development, earlier this month XPCC signed a memorandum with Ukraine's Autonomous Republic of Crimea on infrastructure investments in the peninsula, including an expressway, a government housing project, and a bridge across the Strait of Kerch.

Investing In Food

Ukrainian media reports earlier this month said that Kyiv and Beijing plan to sign by the end of 2013 an agreement allowing Ukrainian farmers to start exporting barley and soybeans to China.

Mutual agreements on exports of Ukrainian wheat and canola to China are expected to be signed next year, Ukrainian media said.

Ukraine has also been expressing an interest in cooperating with China on developing Crimean fisheries.

The Ukrainian and Chinese media reports have yet to be confirmed officially so far.

China accounts for one-fifth of the global population but only 9 percent of its farmland. Demand for food is growing as Chinese incomes rise.

Beijing has made substantial agricultural investments elsewhere, notably in South America. Chinese companies leased 234,000 hectares to grow soybeans and corn and cotton in Argentina, paying $1.2 billion. Chinese companies have also agreed to pay $375 million for soybean plantations in Brazil.

China's overseas expansion in agriculture has raised some concern. In June, Australian politicians called for greater scrutiny over farm purchases by foreign buyers. Chinese investors bought up Australia's biggest cotton farm in 2012.